The Journal Gazette
Sunday, June 10, 2018 1:00 am

Legislators cram on sports betting

Gambling questions for Indiana: Where? How? At all?

NIKI KELLY | The Journal Gazette

INDIANAPOLIS – Pick up your dry cleaning. Check.

Grab milk at the store. Check

Put 20 bucks on the Colts' game. Check.

Is this the future for Hoosiers? Lawmakers this summer will study whether to authorize betting on sports, and several have already said they will file a bill for the 2019 session.

But there is more to the discussion than just to bet or not to bet.

Legislators will have to decide where the wagering will occur, how to tax and spend the revenue from the newly legal activity, whether betting via a mobile device is allowed and even what sports are appropriate.

“We're in the stage of figuring out the right questions to ask,” said Rep. Ben Smaltz, R-Auburn. As chair of the House Public Policy Committee, he will be a major player in the discussion.

“I want to hear what makes it right for Hoosiers or wrong for Hoosiers.”

Matt Bell, president and CEO of the Casino Association of Indiana, said he expects an earnest effort to learn more about the issue.

“The legislature is obviously interested in this topic but there is a lot to learn and a lot to think about,” he said.

The U.S. Supreme Court cleared the way last month when it struck down a federal law that banned commercial sports betting in all but four states. Under that law, Nevada was the only state allowed to take single-game sports bets.

On Tuesday, Delaware started offering full-scale sports betting – becoming the first state to take advantage of the recent decision.

Gov. John Carney tweeted that he had placed the state's first legal single-game bet – $10 on the Philadelphia Phillies, which he won.

Alternatively, Indiana Gov. Eric Holcomb declined to comment, saying it isn't a priority for him.

Dozens of Republican legislators over the years have said they don't support expanding gambling in the state. But what constitutes an expansion has always been murky.

And the spin is already working.

“We're taking something that people are doing illegally today and we are capitalizing on it by making it legal and regulating it,” said Sen. Ron Alting, R-Lafayette, who runs the Senate Public Policy Committee.

“We are getting it out of back rooms and bookies and making it open and transparent.”

Smaltz concedes he is against expanding gambling in the state. But the details of how a bill is written will determine whether he would call it that.

“I don't know if it's an expansion until I find out to what extent it's already going on,” he said.

One recent study estimates between $150 billion and $450 billion in illegal wagers a year on sports nationwide.

The first debate is who should be allowed to conduct sports wagering. Some options include lotteries, casinos, horse tracks and commercial books.

Sports betting has been legal for decades in the United Kingdom and is ingrained there – with ever-present advertising for online betting, and wagering in independent shops and inside stadiums during contests.

That is far different from the Nevada model, where sports betting is tied to a casino license and bets are generally placed in a casino sports book.

Bell said once you create a betting account in person at a Nevada casino a person can bet via an app on their phone or tablet. Such mobile betting is about 30 percent of the sports betting handle there and where the industry is growing, he said.

Without mobile wagering, Bell said the black market would continue to thrive.

It is this model that the Casino Association supports. He believes an optimistic timeline would be for sports wagering to start at the beginning of the 2019 NFL season in Indiana.

Alting said it makes sense to use the existing casino licensing structure through the Indiana Gaming Commission rather than numerous stand-alone betting parlors.

“Why reinvent the wheel if you already have one?” he said.

Smaltz said allowing people to bet all over the state would be a large expansion, and that kiosks and mobile devices seem “far out there for me.” But allowing sports betting in an existing casino would be much less of an expansion.

“It's layer upon layer of questions. It's kind of new territory,” he said.

Bell said casinos have a small profit margin on sports betting – between 2 percent and 4 percent. Instead the money is made pulling people into the casinos where they might order drinks, have dinner, play slots or go to a show.

Bills were filed in both the House and Senate this year but Alting and Smaltz chose not to hear them while the case was pending before the Supreme Court.

Under Terre Haute Republican Sen. Jon Ford's legislation, the betting could occur only at casinos. It defined sports wagering as “conducted on athletic and sporting events involving human competitors.”

It does not include horse racing, which is considered pari-mutuel gaming and is allowed at the state's two horse tracks and three off-track betting parlors in Indianapolis, New Haven and Clarksville.

Professional sports like the NFL are an obvious draw for gamblers. But what about amateur sports like the Olympics and college athletics? It was illegal to bet on both in Nevada until recent years.

The NCAA prohibited championships from being held in states that allowed sports betting. But that rule was suspended immediately after the Supreme Court ruling as experts predict as many as 32 states will legalize it.

The issue is more sticky for Indiana because the NCAA is headquartered in Indianapolis and in the past has taken a hard line against betting on college games.

“They will have a very important role in the discussion,” Alting said, noting he met with the NCAA last year on the topic.

Smaltz said he never considered people betting on high school sports but online sites outside the United States offer it for some football games.

A big part of the discussion will be about money. Lots of it.

Ford's bill called for an initial licensing fee of the greater of 1 percent of adjusted gross receipts from gambling at the casino or $500,000. A fiscal analysis showed that would generate about $22 million.

The legislation also imposed a wagering tax of 9.25 percent on the adjusted gross receipts received from sports wagering, which would bring between $3.1 million and $18.8 million annually.

Bell said the sweet spot is under 10 percent – including the 0.25 percent of total bets to the federal government – to make it financially feasible for casinos. Nevada's state tax is 6.75 percent of gross gaming revenue.

Another complicating factor is that pro leagues might want a cut.

The Center for Public Integrity reported last week that Major League Baseball and the National Basketball Association are quietly working behind the scenes for “integrity fees” of up to 1 percent of all bets placed on games. The argument is to police against fixing games.

“Right now in the euphoria everyone has their hand out,” Bell said.

Alting has an idea on how to spend any state windfall – to harden all schools in the state with video surveillance, metal detectors and a single entrance.

“Security in schools is a high priority this session,” he said. “This could be a revenue stream to help fund that.”

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